TSMC


2021-12-02

Foundry Revenue Rises by 12% QoQ for 3Q21 Thanks to Peak Season, New Production Capacity, and Rising Prices, Says TrendForce

Although the demand for end products related to the stay-at-home economy slowed down as many countries saw rising vaccination rates and were partially lifting social distancing restrictions, the decline in foundry orders from this source was more than offset by the traditional peak season for smartphones, according to TrendForce’s latest investigations. At the same time, OEMs for notebook (laptop) computers, networking devices, automotive electronics, and IoT devices kept vigorously building up their inventories because the earlier capacity crunch in the foundry market was constraining them from reaching their shipment targets. Because of these developments, demand continued to outstrip supply in the foundry market during 3Q21. As for foundries, they have been gradually taking on new production capacity in the recent period and gaining from the ongoing rise in the ASP. Thanks to robust demand, new production capacity, and rising wafer prices, the quarterly total foundry revenue rose by 11.8% QoQ to reach a new record high of US$27.28 billion for 3Q21. This result indicated nine consecutive quarters of revenue growth.

Top four foundries posted double-digit revenue growth for 3Q21 due to peak season for smartphones; SMIC’s revenue growth was slightly limited by restrictions imposed on its capacity expansions

TSMC raised its quarterly revenue by 11.9% QoQ to US$14.88 billion as it benefited from the release of new iPhone models. The foundry remained firmly at the top of the ranking in 3Q21. Regarding TSMC’s revenue generation by node, the combined revenue share of the 7nm and 5nm nodes has already surpassed 50% and is still expanding thanks to continued demand for smartphone chips and HPC chips. Samsung raised its revenue by 11% QoQ to US$4.81 billion for 3Q21 and sat firmly in second place. The revenue growth was attributed to several factors. First, the releases of new smartphone models during the second half of the year has spurred the demand for SoCs and DDIs. Second, fab Line S2 in Austin has returned to its normal level of revenue contribution following the recovery from the winter storm that struck Texas in the earlier part of this year. Third, fab Line S5 in Pyeongtaek has activated its newly added production capacity. And finally, the revenue result for 2Q21 was a low base for comparison and thus led to a rather impressive performance for 3Q21.

UMC made significant gains in 3Q21 because the activation of new production capacity for its 28/22nm nodes led to an increase in wafer input for OLED driver ICs and other components. This also caused a rise in its blended ASP. UMC’s revenue went up by 12.2% QoQ to US$2.04 billion for 3Q21. With a growth rate that surpassed the top two ranking leaders, UMC retained third place by overtaking GlobalFoundries in the ranking for the first time in 1Q20, and its lead has been gradually widening since then. GlobalFoundries posted a QoQ increase of 12% in revenue to US$1.71 billion for 3Q21 and kept fourth place in the ranking. To address the worldwide chip shortage, GlobalFoundries has announced a series of capacity expansions and greenfield projects this year. Existing plants including Fab1 in Dresden and Fab8 in Malta (which is a town in the state of New York) will take on new production capacity. New plants will also be built in Singapore and Malta. It is worth noting that the capacity expansions and greenfield projects that GlobalFoundries has revealed so far for this year will be financed via a public-private partnership model. GlobalFoundries will be leveraging funding from governments and advance payments from its clients to reduce the pressure of rising capital expenditure and ensure that the new production capacity will operate at a high utilization rate in the future.

SMIC increased its revenue by 5.3% QoQ to US$1.42 billion for 3Q21 and was ranked fifth. Two reasons were behind the revenue growth. First, there is a stable level of demand for its PMICs, Wi-Fi chips, MCUs, and RFICs. Second, SMIC has been steadily raising wafer prices. It is also worth pointing out that SMIC has been adjusting its product mix and client base due to geopolitical factors. Growing consistently over the quarters, the share of Chinese clients in SMIC’s client base came to almost 70% in 3Q21. Under the impetus of the semiconductor policies of the Chinese government, SMIC will continue to give priority to the demand from domestic clients. Hence, the portion of foreign clients in its incoming orders will gradually shrink relative to that of domestic clients.

Second- and third-tier foundries posted higher revenue growth rates compared with first-tier counterparts because of strong demand for mature nodes

HuaHong Group posted a QoQ increase of 21.4% in revenue to US$799 million for 3Q21, thereby taking sixth place in the ranking. HuaHong continues to raise its ASP as it production capacity is expected to be fully loaded through the whole 2021. This development, together with the successful capacity expansion undertaken at its Fab7 in Wuxi, contributed to the above-expected revenue result for the foundry. PSMC’s revenue growth continued to pick up pace in 3Q21 thanks to the general rise in wafer prices and the robust demand for the main categories of chip products (e.g., DDIs, PMICs, CIS, and power discretes such as MOSFETs and IGBTs). PSMC raised its quarterly revenue by 14.4% QoQ to US$525 million and was ranked seventh.

After surpassing Tower Semiconductor in the ranking for the first time in 2Q21, VIS maintained its strong growth momentum by posting a QoQ increase of 17.5% in revenue to US$426 million in 3Q21 on account of several factors. First, VIS increased its products shipments through capacity expansion. Furthermore, VIS was able to optimize its product mix and raise its ASP. It secured eighth place in the ranking. Occupying ninth place in the ranking, Tower Semiconductor’s performance exceeded expectations for 3Q21 with its revenue climbing 6.9% QoQ to US$387 million. Tower’s revenue generation mainly benefited from the stable demand related to RF-SOI chips, industrial sensor chips, and PMICs.

Taking the tenth place in the ranking, DB HiTek registered a 15.6% QoQ increase in revenue to a record high of US$283 million for 3Q21 because of the rising ASP. In the past year, DB HiTek kept its capacity utilization rate at almost 100%. To raise its overall output, the foundry has decided to focus its expansion efforts on its existing wafer production lines. As a result, its production capacity has been increasing slightly since 2Q21. The additional production capacity will effectively contribute to its revenue generation in 4Q21.

Moving into 4Q21, although foundries have undertaken various capacity expansions and greenfield projects, their new production capacity that has been activated this year is already completely booked. The new fabs that foundries have announced will need some time to get built and fully set up, so the chip shortage on the whole will unlikely ease off anytime soon. On the demand side, sales have weakened a bit for TVs and other end products associated with the stay-at-home economy. However, the hardware and infrastructure demand related to 5G, Wi-Fi 6, and IoT continues to gain momentum. Moreover, OEMs for consumer electronics are still stocking up on components in preparation for the year-end holiday sales. Based on the latest examination of incoming foundry orders, TrendForce finds that foundries will continue to operate at fully-loaded capacity. Due to the undersupply situation, the overall ASP of the foundry market has also been climbing. Meanwhile, foundries have been optimizing their product mixes to boost their financial performances. Taking account of this and other aforementioned developments, TrendForce believes that revenue growth will continue for the top 10 foundries in 4Q21. However, 4Q21 will also see more moderate growth compared with the previous quarter because there is a shortage of peripheral ICs made using mature process nodes. Additionally, demand has slacked a bit for some SoC products.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

2021-10-28

Annual Foundry Revenue Expected to Reach Historical High Once Again in 2022 with 13% YoY Increase with Chip Shortage Showing Sign of Easing, Says TrendForce

While the global electronics supply chain experienced a chip shortage, the corresponding shortage of foundry capacities also led various foundries to raise their quotes, resulting in an over 20% YoY increase in the total annual revenues of the top 10 foundries for both 2020 and 2021, according to TrendForce’s latest investigations. The top 10 foundries’ annual revenue for 2021 is now expected to surpass US$100 billion. As TSMC leads yet another round of price hikes across the industry, annual foundry revenue for 2022 will likely reach US$117.69 billion, a 13.3% YoY increase.

Foundries will gradually kick off production with newly added capacities in 2H22 in response to the ongoing chip shortage

TrendForce indicates that the combined CAPEX of the top 10 foundries surpassed US$50 billion in 2021, a 43% YoY increase. As new fab constructions and equipment move-ins gradually conclude next year, their combined CAPEX for 2022 is expected to undergo a 15% YoY increase and fall within the US$50-60 billion range. In addition, now that TSMC has officially announced the establishment of a new fab in Japan, total foundry CAPEX will likely increase further next year. TrendForce expects the foundry industry’s total 8-inch and 12-inch wafer capacities to increase by 6% YoY and 14% YoY next year, respectively.

Although the manufacturing costs of 8-inch and 12-inch wafer fabrication equipment are roughly equal, the ASP of 8-inch wafers falls short compared with 12-inch wafers, meaning it is generally less cost-effective for foundries to expand their 8-inch wafer capacities. That is why the increase in 8-inch capacity is also expected to fall short of the increase in 12-inch capacity next year. Regarding 12-inch wafer foundry services, the 1Xnm and more mature nodes, which currently represent the most severe shortage among all manufacturing process technologies, will account for more than 50% of the newly added wafer capacities next year. On the other hand, while Chinese foundries, such as Hua Hong Wuxi and Nexchip, account for most of the newly added 12-inch wafer capacities this year, TSMC and UMC will comprise the majority of 12-inch wafer capacity expansions in 2022. These two foundries will primarily focus on expanding the production capacities allocated to the 40nm and 28nm nodes, both of which are currently in extreme shortage. As a result, the ongoing chip shortage will likely be alleviated somewhat in 2022.

Chip shortages will show signs of easing, but component gaps will continue to impact the production of some end products

Application segments such as consumer electronics (such as notebook computers), automotive electronics, and most connected digital appliances are now being impacted by the shortages of peripheral components made with the 28nm and more mature nodes. The undersupply of the said components will probably begin to moderate somewhat in 2H22 if foundries proceed to activate their newly added production capacity. However, just as there will be signs indicating an easing of capacity crunch for the 40nm and 28nm nodes, the tightening of production capacity for 8-inch wafers and 1Xnm nodes is going to be an important development that warrants close attention in 2022.

Regarding 8-inch wafer foundry services, the overall production capacity growth has been limited while the demand related to PMICs has increased multiple folds. The growth of this particular application has to do with the increasing market penetration of 5G smartphones and electric vehicles. Under this circumstance, PMICs continue to take up the available production capacity of 8-inch wafers, and wafer production lines that deploy ≦0.18µm nodes are now expected to operate at fully-loaded capacity to the end of 2022. Hence, the capacity crunch for 8-inch wafers will not ease in the short term.

As for 1Xnm nodes, the number of foundries that are offering these more advanced process technologies is gradually shrinking. The reason is that following the migration to FinFET in the general development of semiconductor manufacturing, the costs associated with R&D and capacity expansions have risen higher and higher. TSMC, Samsung, and GlobalFoundries are now the only three foundries in the world that possess 1Xnm technologies. Also, GlobalFoundries is the only one among these three to undertake a marginal capacity expansion for its 1Xnm node next year. The other two currently have no plan to raise 1Xnm production capacity in 2022.

In the aspect of demand, the kinds of chips that are made with 1Xnm nodes include the following: 4G SoCs, 5G RF transceivers, and Wi-Fi SoCs equipped in smartphones, as well as TV SoCs, chips for Wi-Fi routers, and FPGAs/ASICs. Due to the increasing market penetration of 5G smartphones, 5G RF transceivers will take up a massive portion of the overall 1Xnm production capacity. This will, in turn, significantly limit the available wafer capacity allocated to other products. Furthermore, demand has been rising over the years for smartphones that are equipped with 1Xnm Wi-Fi SoCs and Wi-Fi routers that contain 1Xnm chips. The supply of these components is already very limited at this moment and will get tighter in 2022 because the overall 1Xnm production capacity will not be raised by a significant amount.

In sum, there are several takeaways from this focus on the potential developments in the foundry market next year. First, the major foundries have now announced capacity expansions with the emphasis on addressing the capacity crunch for the 40nm and 28nm nodes. Their newly added production capacity is expected to enter operation next year, following two consecutive years of chip shortages. This will bring some relief to the undersupply situation, which is already very severe at this moment. However, the actual chip output contribution from the newly added production capacity will mainly take place no earlier than 2H22, or during the middle of the traditional peak season. With stock-up activities across the supply chain expected to reach a higher level of intensity at that time because of preparations for holiday sales, the easing of the capacity crunch in the foundry market will not be especially noticeable.

Second, it is worth pointing out that even though supply will loosen slightly for some 40/28nm chips, the lack of production capacity for 0.1Xµm chips on 8-inch wafers and 1Xnm chips on 12-inch wafers will likely remain a serious bottleneck in the supply chain. Currently, production capacity is already quite insufficient for 0.1Xµm 8-inch wafers and 1Xnm 12-inch wafers. Next year, the related capacity growth is also expected to be fairly limited. In sum, TrendForce believes that the foundry market will continue to experience some tightness in production capacity during 2022. Although the undersupply situation will moderate for some components, the persistent issue of component gaps will also continue to adversely affect the production of certain end products.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

2021-10-18

Why did TSMC choose to build a chip plant in Japan?

Having experienced in worldwide lockdown caused by COVID-19 and rising geopolitical worries in recent years, governments of various countries hope to have wafer manufacturing plants in their own territories to reduce the possible impact of supply chain disconnection; however, building and operating a semiconductor wafer manufacturing factory is not an easy task. In addition to the extremely high cost, high labor demand, and environmental conditions are also a threshold. Therefore, TSMC, the leader in foundries, has naturally become the target of active invitations by governments to set up factories. In addition to Japan,  after evaluating customer needs, cost, and environmental resources (including water, electricity, land) and other conditions, TSMC doesn’t rule out the possibility of setting up factories in other countries if it is cost-effective.

Japan, once the world’s largest semiconductor cluster, still occupies a very important position in some semiconductor equipment, raw materials and packaging materials, and technologies. TSMC has previously announced the establishment of a 3DIC material R&D center in Japan, and this time it announced the establishment of a wafer manufacturing plant. In addition to deepening the streamlined process of customer products from manufacturing to packaging, it can also cooperate closely with upstream equipment vendors, chemical raw materials factories, such as TEL, SCREEN, SUMCO, Shinetsu, etc.

(Image credit: TSMC

2021-09-30

When will the chip shortage be resolved? According to TrendForce: 2H22

This year sees the continuation of the persistent chip shortage, which entails a shortage of production capacity for not only 12-inch wafers fabricated with mature process technologies but also 8-inch wafers in particular. The shortage of 8-inch wafer production capacity initially began gestating in 2H19, owing to emerging demand from structural changes in the semiconductor industry, with 5G smartphones and PMICs used in new energy vehicles as two examples of such demand. At the same time, the consumption of semiconductor production capacity has also increased multiplicatively in recent years as a result of the aforementioned structural changes. TrendForce expects demand for semiconductor capacity from emerging applications to continue rising in the coming years.

In response to this emerging demand, foundries such as TSMC, UMC, and SMIC are currently expanding their investment in mature process technologies. TrendForce expects the industry’s total 8-inch wafer capacity to grow at a 3-5% CAGR from 2019 to 2023, while 12-inch wafer capacity is expected to grow at an 11-13% CAGR across the same period. It should be pointed out that production capacities allocated to the 0.18-0.11µm process nodes(for 8-inch wafer fabrication) and 55nm-12nm nodes(for 12-inch wafer fabrication)represent the most severe shortage among all process nodes. Hence, certain foundries are expected to gradually install additional production capacities for mature process technologies in 2H22-1H23. These installations will likely help address the ongoing chip shortage.

In addition, several foundries are focusing on expanding their 28nm manufacturing capacity, primarily because transistor architecture below the 20nm node requires a transition to FinFET architecture, which is relatively costly. The 28nm node represents the sweet spot in terms of cost/benefit and is widely used for manufacturing such mainstream products as notebook Wi-Fi chips, smartphone OLED driver ICs, automotive MCUs, and image signal processors. Furthermore, chips used for IoT applications, including smart home appliances and set-top boxes, as well as other products currently manufactured at the 40nm node will likely be migrated to 28nm manufacturing, meaning the demand for 28nm capacity will continue to grow going forward.

(Image credit: Pixabay)

2021-09-16

TrendForce Announces 10 Tech Industry Trends for 2022

In this press release, TrendForce details 10 major trends that are expected to take place across various segments in the tech industry, as follows:

Micro/Mini LED display development will revolve around active matrix solutions

A substantial number of technical bottlenecks in Micro LED development will still persist in 2022. While Micro LED manufacturing costs are expected to remain sky-high due to these bottlenecks, companies have not shown decreased willingness to participate in all segments of the Micro LED supply chain. On the contrary, these companies are actively expanding their respective production lines. Regarding the development of self-emitting Micro LED display products, TVs represent one of the major directions of mainstream Micro LED development, primarily because TVs, compared to IT products, have a relatively low technological barrier of entry. In other words, Micro LED TVs are easier to develop than are other Micro LED display products. For instance, after releasing a 110-inch commercial passive matrix Micro LED display, Samsung will likely continue to develop 88-inch (and under) consumer-grade active matrix Micro LED TVs. This extension of Micro LED technology from the large-sized commercial display segment to the household-use segment by Samsung is in turn indicative of the overall expansion of the Micro LED market.

Regarding display products equipped with Mini LED backlights, brands have been raising the number of Mini LED chips used per panel in an attempt to boost the specs of their display products and pursue 1:1,000,000 high contrast ratios that are comparable to OLED displays. As a result, Mini LED backlight panels’ LED chip consumption is more than 10 times higher compared to traditional LED backlight panels, in addition to the fact that Mini LED backplane manufacturing requires SMT equipment with a higher degree of accuracy and production capacity. While Mini LED backlights are primarily based on passive matrix solutions, they will move towards active matrix solutions going forward, with a corresponding surge in Mini LED chip consumption. Hence, the performance and capacity of SMT equipment will also become one of the key criteria in brands’ selection of potential supply chain partners.

More advanced AMOLED technology and under-display cameras will usher in the next stage of smartphone revolution

As the supply of and production capacity for AMOLED panels continue to rise, AMOLED technology has also become increasingly mature. Leading suppliers are still attempting to tack on additional functions and improved specs to their AMOLED panels in order to not only raise said panels’ added values, but also maintain the competitive advantages of the suppliers themselves. The primary value added to AMOLED panels in 2022 will likely continue to be the ever-improving foldable designs, which will feature optimized weight reduction and power efficiency. Apart from mainstream foldable phones that can unfold to reach tablet-like sizes, clamshell-like designs such as flip-up and flip-down smartphone bodies will also emerge as a form factor that more closely resembles the smartphones currently in use. Furthermore, retail prices of foldable phones are expected to generally fall within the price bands of mainstream flagships, thereby generating sales growths for the upcoming foldable models. Other foldable designs, including form factors with even more folds or rollable form factors, are expected to enter production within the near future. TrendForce expects foldable phones to reach a penetration rate of more than 1% in 2022 and 4% in 2024. LTPO panels, on the other hand, are an effective solution to power consumption issues arising from the adoption of 5G technology and high refresh rate displays. Hence, LTPO panels will likely gradually become the mainstream display panel for flagship smartphones. After two years of development and adjustments, under-display camera modules will finally make their appearance in various brands’ flagship models and enable the creation of smartphones with true full-screen displays.

The foundry industry welcomes the arrival of 3nm process technology courtesy of TSMC’s FinFET and Samsung’s GAA technologies

As semiconductor manufacturing processes gradually approach physical limits, chip development must now turn to either “changes in transistor architecture” or “breakthroughs in back-end packaging technology or materials” in order to achieve faster performances, reduced power consumption, and smaller footprints. After incorporating EUV lithography at the 7nm node in 2018, the semiconductor industry will welcome yet another revolutionary process technology in 2022 – the 3nm node. More specifically, TSMC and Samsung are expected to announce their respective 3nm process technologies in 2H22. While the former will continue to adopt the FinFET architecture that it has been using since the 1Xnm node, Samsung will for the first time utilize its own implementation of GAAFET, called MBCFET (multi-bridge channel field-effect transistor) for its 3nm process technology.

In contrast with the FinFET architecture, in which the gate makes contact with the source/drain channel on three sides, the GAAFET architecture consists of a gate that surrounds the nanowire or nanosheet channel on four sides, thus increasing the surface area of contact. The GAAFET design significantly reduces leakage currents by giving the gate a greater degree of control over the channel. Regarding possible applications, the first batch of products mass produced at the 3nm node in 2H22 is expected to primarily be HPC and smartphone chips since these products place a relatively high demand on performance, power consumption, and chip compactness.

While DDR5 products gradually enter mass production, NAND Flash stacking technology will advance past 200 layers

The three dominant DRAM suppliers (Samsung, SK Hynix, and Micron) will not only gradually kick off mass production of next-gen DDR5 products, but also continue to increase the penetration rate of LPDDR5 in the smartphone market in response to demand for 5G smartphones. With memory speed in excess of 4800Mbps, DDR5 DRAM can massively improve computing performances via their fast speed and low power consumption. As Intel releases its new CPUs that support DDR5 memory, with Alder Lake for the PC segment, followed by Eagle Stream for the server segment, DDR5 is expected to account for about 10-15% of DRAM suppliers’ total bit output by the end of 2022. Regarding process technologies, Samsung and SK hynix will kick off mass production of 1 alpha nm products manufactured with EUV lithography. These products’ market shares will likely increase on a quarterly basis next year.

Turning to NAND Flash products, their stacking technologies have yet to reach a bottleneck. Hence, after 176L products entered mass production in 2021, suppliers will continue to migrate towards 200L and above in 2022, although these upcoming products’ chip densities will remain at 512Gb/1Tb. Regarding storage interfaces, the market share of PCIe Gen4 SSDs will likely skyrocket in the consumer PC segment next year. In the server segment, as Intel Eagle Stream CPUs, which support PCIe Gen 5, enter mass production, the enterprise SSD market will also see the release of products that support this interface. Compared to the previous generation, PCIe Gen 5 features double the data transfer rate at 32GT/s and an expanded storage capacity for mainstream products at 4/8TB in order to meet the HPC demand of servers and data centers. Additionally, the release of PCIe Gen 5 SSDs is expected to quickly raise the average data storage capacity per server unit.

Regarding the server market, flexible pricing schemes and diverse services offered by CSPs have directly propelled the cloud service demand of enterprises in the past two years. From the perspective of the server supply chain, the predominant business model has gradually transformed from traditional server brands to ODM Direct, meaning that traditional server brands will see fundamental, structural changes, such as providing colocation servers or full-service cloud migration support, in their business models. This shift also means that enterprise clients will come to rely on more flexible pricing schemes and diverse risk mitigation measures in response to an uncertain global environment. In particular, while the pandemic accelerated changes in work and everyday life in 2020, hyperscalers are expected to account for nearly 50% of total demand for servers in 2022. In addition, the growth in ODM Direct server shipment is expected to surpass 10% YoY as well.

Mobile network operators will undertake more trial projects for 5G SA network slicing and low-latency applications

Mobile network operators have been actively release 5G SA (standalone) networks as the core network powering various services around the world, in turn accelerating the build-out of base stations in major cities, diversifying their network services (via network slicing and edge computing), and delivering end-to-end networks with a high degree of quality assurance. Moving to 2022, applications that are at the intersection of 5G, massive IoT, and critical IoT will emerge in response to enterprise demand. These applications, including light switches, sensors, and thermostats used in smart factories, involve the combination of network endpoints and data transmission. In particular, critical IoT applications include smart grid automation, telemedicine, traffic safety, and industrial automation, whereas critical IoT use cases within the context of Industry 4.0 include asset tracking, predictive maintenance, FSM (field service management), and logistics optimization.

Now that the pandemic has forced enterprises to engage in digital transformation and brought changes to the general public’s lifestyles, the importance of 5G deployment has become increasingly apparent. Private 5G networks, openRAN, unlicensed spectrums, and mmWave developments have also generated a diverse ecosystem that ranges from traditional mobile network operators to other emerging service providers, including OTT media service providers, CSPs, social media, and online businesses. In the future, mobile network operators will likely actively expand their enterprise 5G applications. For instance, O2’s 5G-ENCODE project explores new business models in industrial 5G networks, while Vodafone is collaborating with the MFM (Midlands Future Mobility) consortium to test networks for autonomous vehicles.

Satellite operators will compete over the low-earth orbit satellite market, with 3GPP now supporting non-terrestrial networks

3GPP recently announced that Release 17 Protocol Coding Freeze will take place in 2022. Release 17 represents the first time 3GPP has incorporated NTN (non-terrestrial network) communications into its releases and therefore marks a significant milestone for both the mobile communications industry and the satellite communications industry. Prior to this, mobile communications and satellite communications had been two separate, independently developing industries. That is why companies working across the two industries in the upstream, midstream, and downstream supply were generally different as well. After 3GPP includes NTN in its upcoming release, the two industries are likely to generate more opportunities for collaboration and co-create brand new innovations. Regarding the deployment of LEO (low earth orbit) satellites, US-based SpaceX has applied to launch the highest number of satellites among all satellite operators. Other major operators include Amazon, UK-based OneWeb, Canada-based Telesat, etc. Region-wise, US operators account for more than 50% of all satellites launched. Not only do LEO satellites have the advantage of signal coverage that is unaffected by geographical features, such as mountainous regions, oceans, and deserts, but they are also able to synergize with the 5G network. The ability of LEO satellites, as part of the NTN, to enhance 5G communications makes them a crucial component in the 3GPP Release 17. TrendForce therefore forecasts an increase in global satellite revenue in 2022.

While smart factories are among the first to leverage digital twins, IoT technologies are expected to become the backbone of the metaverse

The new normal that emerged in the wake of the COVID-19 pandemic continues to propel demand for contactless devices and digital transformations. As part of this evolution, IoT development in 2022 will likely focus on CPS (cyber-physical systems), which combines 5G, edge computing, and AI technologies to extract and analyze valuable information from vast data streams for the purpose of smart automation and prediction. A current example of CPS applications is the digital twin, used for such verticals as smart manufacturing and smart cities; while CPS integration for the former facilitates design, testing, and manufacturing simulations, the latter make use of CPS to monitor significant assets and assist in policymaking. Now that industrial realities have become more complex, and the interplay between usage cases and equipment have increasingly demanded attention, digital twins will subsequently be deployed to a wider range of applications. Paired with 3D sensing, VR, and AR capabilities, IoT-based metaverse will likely emerge as a smart, complete, real-time, and safe mirror to the physical world, and the first application of IoT-based metaverse is expected to be smart factories. Ultimately, technological innovations in data collection (including visual, auditory, and environmental data via sensors), data analysis (via AI platform integration), and data integrity (via blockchains) will also emerge as a result of IoT development.

AR/VR equipment manufacturers aim to deliver fully immersive experiences via integration of additional sensors and AI processing

The COVID-19 pandemic has fundamentally changed the way people live and work. For enterprises, the pandemic not only accelerated their pace of digital transformation, but also increased their willingness to integrate emerging technologies into their existing operations. For instance, AR/VR adoption for applications such as virtual meetings, AR remote support, and virtual design has been on the rise recently. On the other hand, companies will likely focus on various remote interaction functionalities in virtual communities and online games as an important AR/VR market segment. TrendForce therefore believes that the AR/VR market will expand by a considerable margin in 2022 due to the falling retail prices of AR/VR hardware as well as the growing adoption of such hardware for various use cases. Furthermore, the market will also continue to pursue more realistic AR/VR effects, such as applications that feature more realistic images constructed by software tools or the creation of virtual responses from real-world data assisted by either AI processing or the integration of various sensors. For instance, eye-tracking functionalities will become an optional feature of consumer products released by Oculus and Sony. Apart from these examples, AR/VR solutions may even evolve to the point where they are able to provide partial haptic feedback to the user through controllers or other wearable devices in order to deepen user immersion.

A natural extension of autonomous driving technology, automated valet parking is set to resolve drivers’ pain points

As part of autonomous driving technology’s implementation aimed at improving everyday life, AVP (automated valet parking), an SAE level 4 driverless parking service, is expected to become an important optional function of high-end vehicles beginning in 2022. Relevant international standards are currently being drafted and are expected to facilitate the adoption of AVP going forward. However, since AVP systems differ according to vehicle specifications, they are subject to various restrictions related to driving conditions, including fixed/unfixed routes and private/public parking spaces, while parking lot conditions such as wireless network connectivity and the comprehensiveness of traffic markings can also affect the viability of AVP. The distance between people and the vehicle during AVP use, on the other hand, is governed by domestic laws. In view of automakers’ diverse technological roadmaps, AVP parking routes are generated by either local computing on the vehicle end or cloud computing, the latter of which requires sufficient network connectivity in order to function. The former is therefore expected to see usage in a wider variety of use cases. Alternatively, some vehicles may be equipped with both computing solutions. With other such factors as V2X and high-definition maps affecting the range of AVP applications, TrendForce expects an increasing number of different AVP solutions to be under development at the moment.

The third-generation semiconductor industry will move towards 8-inch wafers and new packaging technologies while expanding in production capacity

The gradual phasing out of ICE vehicles by various governments across the 2025-2050 period is set to both accelerate the pace of EV sales and increase the penetration rate of SiC and GaN devices/modules. Energy transition activities worldwide as well as the rapid growth of telecom applications such as 5G technology have also led to a persistent bull market for third-generation semiconductors, resulting in strong sales of SiC and Si substrates. However, as current efforts in substrate production and development are relatively limited, suppliers are able to ensure a steady yield of SiC and GaN substrates only by manufacturing them with 6-inch wafers. Such a limitation has, in turn, led to a long-term shortage in foundries’ and IDMs’ production capacities.

In response to this quandary, substrate suppliers, including Cree, II-VI, and Qromis, are now planning to not only expand their production capacities in 2022, but also migrate their SiC and GaN production to 8-inch wafers, in hopes that these plans will gradually alleviate the prevailing shortage in the third-generation semiconductor market. On the other hand, foundries such as TSMC and VIS are attempting to shift to 8-inch wafer fabrication for GaN on Si technology, while major IDM Infineon is releasing products based on the latest CoolSiC MOSFET, delivering trench designs that enable significant power efficiency for semiconductor devices. Finally, telecommunication component provider Qorvo has also released a new GaN MMIC copper flip chip packaging architecture for military applications.

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